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Lord Sainsbury of Turville: My Lords, I very much accept that. Obviously, it is the law that counts. We have been consulting on these regulations, so at this stage they are well known about by those who wish to find out about them. As the noble Lord will know, many businesses leave it until a short period before the legislation comes into force before they take the trouble to look for it. We are currently testing the guidance with employers and the Employers Federation, including advice on sufficient explanations. A set of forms will accompany the guidance to help employers, so we will cover the point that the noble Lord raised.

When we review the legislation in three years, we will look at all the issues that the noble Lord mentioned, including the need for people to go to tribunals. I think that will be done, not by the Strategy Unit or the DTI, but by specialists in such legislation.

I accept that the House of Lords should welcome this as an example of flexible working, although sometimes the flexibility is not as obvious for Ministers as it should be. I do not think that we shall be able to apply for change of hours under this legislation.

I thank noble Lords for their support of the regulations. They have been drafted very carefully, with small businesses in mind. We have tested the regulations with them as we have gone along. I think they will find the end result relatively easy to deal with. On that basis, I commend the regulations to the House.

On Question, Motion agreed to.

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Companies (Fees) (Amendment No. 2) Regulations 2002

4.21 p.m.

Lord McIntosh of Haringey rose to move, That the draft regulations laid before the House on 21st November be approved [3rd Report from the Joint Committee].

The noble Lord said: My Lords, the regulations will apply to England and Wales and Scotland, but not to Northern Ireland which has its own company registry and sets its own fees. The order was debated and approved on 4th December by the standing committee on delegated legislation in another place.

The effect of the regulations, which are mainly required for technical legal reasons, is to repeal the statutory fees for microfiche-based services produced by Companies House.

Companies House, an executive agency of the DTI with trading fund status, has successfully achieved the Government's modernising agenda of providing access to basic company information electronically. Falling demand and the take-up of electronic search services have rendered microfiche products uneconomic to produce. The number of microfiche-based searches has fallen from 2 million in 1995–96 to an estimated 250,000 by the end of this year—a fall of 90 per cent in seven years. This has occurred in parallel with Companies House developing and delivering its electronic search services to meet customer demand. All customers can now obtain electronic company information in convenient ways that suit their needs.

I told the House on 11th March this year that Companies House was looking to shift from microfiche services to electronic services to satisfy demand for basic company information by the end of this year as a consequence of the fall in demand. Companies House is now at this point. The organisation will stop updating microfiche-based company records on 31st December 2002. However, the frozen microfiche will still be available to searchers as an archive product.

To provide its electronic service, Companies House has scanned all the documents it has received since April 1995 to give a comprehensive company record. It also has a programme to capture images from older microfiche for the more commonly searched companies and has the ability to scan any other document held on microfiche and deliver it electronically.

However, we recognise that a few customers will not have access to appropriate computer equipment to receive and view electronic images of company information. The regulations cater for this by setting a statutory fee for a postal, paper-based document information service to complement electronic information delivery services. This service is not new but replaces the previous statutory paper-based service that was set when microfiche was the primary source of company information.

If Companies House were to retain the existing microfiche services, it is estimated that the cost of the basic product would have to increase to a prohibitive

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20. This is because the costs of producing microfiche are large, with insignificant variable costs. Therefore volumes of searches significantly influence unit costs. I believe that such a high price would be unacceptable even to those who traditionally use microfiche.

Companies House has put considerable effort into informing customers about this change to its services. Since the beginning of the year it has undertaken a communications campaign, including advertisements in the national press and relevant trade publications, direct mailing to all known microfiche customers and leaflets in Companies House information centres. The campaign also includes information posted online on the Companies House website and the Companies House Direct service. Companies House has also managed to re-deploy all its staff involved in the production of microfiche.

The Companies House Executive Agency remains a key statutory registry with an enormously important role in company information provision. In October 2000, the agency's website was launched with a capability of delivering information anywhere in the world at the touch of a button. This can only be to the benefit of the British economy as a whole.

I confirm that these regulations conform to the European Convention on Human Rights. I hope that my explanation has been helpful. I commend the regulations to the House.

Moved, That the draft regulations laid before the House on 21st November be approved [3rd Report from the Joint Committee].—(Lord McIntosh of Haringey.)

Lord Hodgson of Astley Abbotts: My Lords, noble Lords on these Benches are grateful to the Minister for having explained a complex subject most clearly. We accept what appear to be the two key conclusions of these regulations; namely, that microfilming will end with effect from the 3lst December next. We have to accept that microfilm is yesterday's technology, and that there is a lower demand for it. Secondly, we accept that Companies House must earn a return on its activities, but as its return last year was 9 per cent as opposed to a target of 6 per cent, I have a question to which I shall return shortly. However, we accept that there has to be an increase in the fees chargeable.

I should like raise a few points with the Minister. Under the new regime, can the noble Lord say whether the public will still be able to access microfilm directly? Alternatively, will people be able to obtain a printed copy only via the postal service? I ask that question because deterioration can occur in the quality of such material when photocopies are made. In my experience, it is all too often the case that the piece that one most wants to read is the one that has faded to invisibility. I have in mind notes to accounts where the print is quite small, which means that you cannot actually read it when you receive the printed copy through the post. I should like to know whether people can obtain direct access to the microfiche.

I turn to the position in Northern Ireland, which, as the Minister said, is not covered by these regulations. Are the fees charged comparable with those of the

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Companies Registry in London? Further, can people gain access to Companies House via Belfast? If that is possible, presumably there is an opportunity for arbitrage in terms of the examination of records.

With regard to the rate of return being 9 per cent, I noted in the debate in another place that Ms Melanie Johnson, the Parliamentary Under-Secretary of State for Competition, Consumers and Markets, said that the excess over the target—that is to say, 3 per cent in excess of 6 per cent—was due to a higher than expected level of company registrations. I presume that that condition will no longer persist with the tighter economic conditions around the country. If the return remains above the target of 6 per cent, will the Minister bring forward reductions in order to reduce it to the target level of return?

Finally, I have a slightly wider question, but one which has perhaps assumed a greater relevance and importance as we move to an entirely electronically-based system of data retention. The noble Lord will know from debates in the House, and from his commercial experience, that boards of directors are increasingly being asked to focus on the key risks faced by their businesses; indeed, under the new combined code, they are required to do so. Key among those risks are those classified as "interruption of business"—fire, flood, loss of power supply, and the corruption of electronic records.

Companies address those risks by what is normally called a "disaster recovery programme", which inter alia requires: first, duplication of records, one copy of which is then held off site; secondly, alternative facilities, which the staff can use to provide at least a skeleton or nominal service until normal business can be resumed; and, thirdly, a plan for who does what and when if disaster strikes.

Companies House is a key part of our market-based system, on which I know the Minister is keen—I heard him espouse it during the Committee stage debate on the Enterprise Act 2002. It would be helpful if the noble Lord could let us know a little more about the disaster recovery programme, and the precautions that are being taken at Companies House in this time of political uncertainty. Subject to satisfactory replies on the points that I have raised, noble Lords on these Benches are happy with these regulations as made.

4.30 p.m.

Lord Roper: My Lords, on behalf of these Benches I welcome the regulations. First, however, I must declare a personal if not a financial interest: I hate microfiche. I think that it is the most difficult and disagreeable way of accessing data, and I have always found it very difficult to manipulate. The move to electronic data which will be much more accessible is therefore a step in the right direction.

I pursue the issue raised by the noble Lord, Lord Hodgson, about the specific fees in the regulations and the return on the activities of Companies House. Companies House should of course cover its costs; I think that all noble Lords will agree that that is the right principle. However, how

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often are the fees reviewed to ensure that the return on the facility is not excessive? Companies House provides an extremely useful facility to the whole of society, but it would be wrong for the Government to take a higher than expected return. We need an assurance that the fees are occasionally reviewed to ensure that excess profits are not being generated.

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